March, 2024
For sustainability leaders designing tomorrow’s waste-free operation, what does inventory management have to do with it?
The most efficient businesses in industry today are those that successfully implement the lowest cost process to meet customer demand. If they are producing physical products on an international scale, they are digitizing inventory management to continually streamline their operation. Only with real-time data can they ensure the right product is available at the right place for customers. This article explores how digital technology implemented by operations leaders for inventory management is becoming pivotal in reducing waste, and helping sustainability leaders meet their environmental goals.
The waste challenge is unique within each industry and their supply chain, and there is no single solution to address them all. However the issue is vast in both financial and environmental costs.
For example food retailers anticipate losing 7.1% of inventory due to expiry dates on fresh produce, damage and spoiling. Add the overproduction required from food producers to make sure shelves are full to meet potential demand, and the total anticipated waste is 8%, a staggering $163 billion cost to the industry.
The missing billions
Our research identifies the staggering cost of waste in multiple industries including apparel ($264 billion), and automotive $ 296 billion. What the leaders in these industries do experience is that significant progress is often thwarted by a lack of reliable information. The ambition and determination to eradicate waste requires identifying precisely where the problems are occurring. Extracting information from fragmented and complex supply chains is imperfect at best. Many are working with old data and layers of assumptions.
Businesses that have implemented RFID-based inventory management solutions have experienced the potential of item level visibility, and it has already transformed their performance. They know instantly the location of every item in their inventory and its status. This is enabling a direct match between production, demand and sales whether online or in physical points of sale, and automated replenishment. It also illuminates the locations or stages in the supply chain that can be a risk for shrinkage, so preventative actions can be taken. There is no place inefficiency can hide.
No place for waste
For sustainability leaders this granular level of visibility can be leveraged to identify significant waste reduction. Imagine removing the need for overproduction. And being able to automatically retrieve real time, accurate data from all the facilities and stages in the supply chain that are currently ‘dark’ zones and data poor.
What’s next? Carbon sensors
How we apply technologies can accelerate tomorrow’s circular business models. Imagine if every item produced had a sensor providing real-time, accurate data on environmental metrics; a live tracking energy or emissions label for every unit of production, through its entire life cycle. As industries and regulators work towards new standards for industries, they will need to rely on numerous data points across the supply chain to quantify and certify performance and compliance.
At Avery Dennison our vision is that every physical product has a digital identity, which provides actionable insights businesses need to solve complex challenges.
Today we can already make a leap to becoming waste free by leveraging digital identification in inventory management solutions. Tomorrow the same technologies will be providing the data we’ll need to develop successful circular industries.
Our latest report in partnership with The Future Laboratory explores new trends that are calling on businesses to go beyond sustainability and towards regenerative retail model. Check out expert interviews, consumer insights and emerging trends that will drive transformation in the decade ahead.
At Avery Dennison we believe technology can be a force for good and enable a better tomorrow. Our latest film “A Portrait of a Supply Chain” is an expression of this vision: A future where technology can drive positive change both for the people and for the planet. Discover how digital ID can help you unlock vast possibilities, making your supply chains more transparent while helping to empower the people along the journey.
Doing business sustainably – growing while using fewer natural resources and reducing carbon emissions and other pollution – is now mandatory for companies, if not through regulation, then from a consuming public that expects the things they buy to have minimal impact on people and the planet. Avery Dennison offers the industry’s largest portfolio of inlays that live up to our sustainability promise, and our goal is to create products that are third-party verified, providing market guidance and clarity on what is a truly sustainable RFID inlay.